AI in action · Regulation
Australia Rewrites Its Trading Rules for AI Algorithms
ASIC has amended its market integrity rules so brokers must test, monitor and govern every trading algorithm, AI included, from 2028. Comments on the matching guidance close on November 5.
"Trading on Australia's markets is now almost entirely automated, and the adoption of AI is increasing," ASIC Commissioner Simone Constant said when the regulator published its changes. She added that trading algorithms "can also behave in ways that are opaque, unpredictable and potentially manipulative". The response is a rewrite of the rules for both securities and futures market participants, and the last chance to comment on how they will be applied closes at 5pm AEDT on Thursday, November 5.
The rules themselves are settled. After feedback on Consultation Paper 386, ASIC amended its Market Integrity Rules for securities markets and futures markets so that trading-system obligations cover algorithmic trading, AI and machine learning; apply to manually entered as well as automated orders; set more consistent standards across the two markets; and line up with IOSCO principles. Participants must test, monitor and govern their trading systems and algorithms, alongside the market operators' anomalous-order thresholds and extreme trade ranges.
One change goes to the heart of AI-driven trading: ASIC clarified that the ban on creating a false or misleading appearance of trading applies where AI-enabled or other automated trading produces it. A firm cannot defend a misleading pattern of orders by saying the model, not a person, chose to place them. The reforms are technology-neutral, so the same duties apply whatever kind of algorithm is behind the orders.
There is time to adapt. The amendments take effect in 2028, and ASIC lengthened the transition to 18 months after consultation. What is still open is Consultation Paper CS 63, which updates the guides for securities and futures participants (RG 265 and RG 266), folds in and withdraws the older guide on electronic trading (RG 241) and cuts the guidance for securities participants by almost 60%.
For investors outside Australia, the interest is in the direction. Like SEBI's kill-switch proposals in India and the work of IOSCO on AI in capital markets, ASIC is not writing AI-specific rules; it is making clear that existing duties on testing, supervision and market abuse already reach the machines, and that the firm running them answers for what they do.
Sources: ASIC — 26-226MR ASIC strengthens AI trading safeguards and streamlines market integrity rules (2026); AdviserVoice — ASIC strengthens AI trading safeguards and streamlines market integrity rules (Sep 2026)